At Horsfield & Smith, we understand that managing your corporation tax return can be a complex and time-consuming task. As experienced tax and business advisers, we are here to help businesses navigate the Corporation Tax Self Assessment (CTSA) process efficiently, ensuring compliance with HMRC regulations while optimising tax efficiency.
Key features of corporation tax self assessment
CTSA requires companies to:
- Pay the corporation tax due in advance of filing a tax return.
- Submit their tax return under a ‘process now, check later’ enquiry regime.
- Include liabilities for loans to shareholders and Controlled Foreign Companies in the tax return.
- Self-assess by reference to transfer pricing legislation.
- Ensure compliance with Companies House filing requirements for corporate transparency.
- Understanding these key features is essential for businesses to ensure they meet their corporation tax obligations accurately and on time.
Filing your corporation tax return
Every year, HMRC issues a Notice to Deliver to companies. Businesses must submit their corporation tax return within 12 months of the end of their accounting period. Failure to do so can result in penalties. It is crucial to understand the corporation tax self assessment process to avoid delays and penalties in submitting your return.
Online filing requirements
- Companies must file their corporate reports and tax return online in iXBRL format.
- Companies must submit annual accounts and computations in iXBRL format.
- Charities and other organisations that are not registered as companies can submit accounts in PDF format but must file their tax return online.
- Companies must keep their accounts with Companies House up to date to ensure full compliance with regulatory requirements.
Penalties for late submission
To avoid penalties, businesses must ensure they meet all deadlines. The penalties for late filing include:
- £100 for returns up to three months late.
- An additional £100 for returns over three months late.
- 10% of the unpaid tax if the return is six or twelve months late.
If a company repeatedly files late, the standard £100 penalty increases to £500 per instance.
How HMRC handles submissions
Once a company submits its tax return, it becomes final unless:
- The company makes an amendment within 12 months of the filing deadline.
- HMRC corrects ‘obvious’ errors within nine months of submission.
- HMRC opens an enquiry within 12 months to review the return’s accuracy.
HMRC enquiries
HMRC has the right to enquire into any corporation tax return to verify its accuracy. Enquiries may range from simple information requests to full reviews of a company’s records. If no enquiry is opened within the time limit and the company does not change the return, it is deemed final.
Discovery assessments
HMRC can issue a discovery assessment if new information comes to light after the enquiry period, indicating an inaccurate self-assessment. Time limits for these assessments are:
- Four years for standard errors.
- Six years if the error was due to careless behaviour.
- Twenty years for deliberate fraud or failure to notify HMRC about taxable income.
Payment of corporation tax
The due date for corporation tax return payments is nine months and one day after the end of the accounting period. Large and very large companies may need to pay in quarterly instalments. Late payments incur interest charges, while early payments may attract credit interest.
Loans to shareholders
Companies classified as close companies (most privately owned businesses) must report any loans to shareholders. If the company does not repay a loan within nine months of the accounting period’s end, it must pay a corporation tax charge of 33.75% on the outstanding amount. The company can reclaim this tax when it repays, writes off or releases the loan within the specified time limits.
Anti-avoidance measures
To prevent tax avoidance, HMRC has introduced rules, including:
- A 30-day rule, which treats a repaid loan as outstanding if a similar amount is withdrawn within 30 days.
- Additional rules preventing the cycling of funds to avoid taxation.
Given the complexity of these regulations, it is advisable to consult expert tax and business advisers to ensure compliance.
Tax accounting and business structures
Whether you’re a limited company, a sole trader or operating under another structure, understanding tax accounting is crucial for maintaining compliance. Taxable profits must be accurately reported to avoid unnecessary penalties and ensure your business maximises tax efficiency.
Additionally, companies must ensure that they submit their income tax returns where applicable and maintain accurate corporate reports for Companies House.
How Horsfield & Smith can help
At Horsfield & Smith, we are committed to making corporation tax return filing as seamless as possible. Our team of tax and business advisers can assist with:
- Preparing and submitting your corporation tax return.
- Ensuring compliance with HMRC regulations.
- Advising on tax-efficient strategies to minimise your tax liability.
- Managing HMRC enquiries and compliance checks.
With over a century of experience, we are a trusted partner for businesses looking to streamline their tax obligations while maximising opportunities for growth.
Get in touch
For expert assistance with your corporation tax return, contact Horsfield & Smith today. Call us at 0161 761 5231 or email theteam@horsfield-smith.co.uk to speak with our professional tax and business advisers.
Let us handle the complexities of corporate taxation while you focus on growing your business.
